Second Stimulus: Barack and a Hard Place

Does the United States economy need a second Stimulus Package? Can we afford to do it? Can we afford not to do it? What happened to the first one? Why hasn’t that package seemed to have a greater impact?

So many questions and seemingly so few concrete answers. The White House itself is sending out mixed messages on this topic. Add it all up and there is little doubt the U.S. economy is “between Barack and a hard place,” and neither looks all that appealing.

From my standpoint, the reason why we are at this juncture is ultimately due to the fact that the government, media, and financial industry have not fully explained the basic structural changes at work in our economy currently. That structural change centers on the fact that our economy is adjusting from running on excessive debt to operating on real savings and cash flow generated by real earnings. That adjustment takes time.

Obama has largely painted himself into a corner in regard to the economy and another stimulus package. What is surrounding Barack and team?

» The Wall Street Journal reports House Majority Leader Hoyer Signals More Stimulus May Be Needed. Steny is not exactly going out on a limb here, while clearly trying to curry favor with his constituents back home.

» Bloomberg highlights that Obama Adviser Says U.S. Should Mull Second Stimulus:

The U.S. should consider drafting a second stimulus package focusing on infrastructure projects because the $787 billion approved in February was “a bit too small,” said Laura Tyson, an outside adviser to President Barack Obama.

The current plan “will have a positive effect, but the real economy is a sicker patient,” Tyson said in a speech in Singapore today.

» The other side of the stimulus coin has real White House representation in the persons of Austan Goolsbee and Joe Biden, as Bloomberg reports:

Tyson’s comments contrast with remarks made two days ago by Vice President Joe Biden and fellow Obama adviser Austan Goolsbee, who said it was premature to discuss crafting another stimulus because the current measures have yet to fully take effect.

While Barack is catching it from all sides within his own party, the talk of green shoots has significantly subsided. From my standpoint, it seems rather obvious that the following are true:

1. the initial Stimulus Package was very poorly drafted with too much focus on advancenment of the Democratic agenda at the expense of immediate economic relief.

2. as highlighted previously, the depth of our economic problems and the ongoing structural changes have never been properly defined. Talk of green shoots was a facade created by government funding and programs and promoted by a compliant media.

3. the administration currently has little economic flexibility given the size and scope of the other items on Obama’s agenda, specifically healthcare, cap and trade, education, and existing commitments to the banks.

4. the public at large clearly wants economic stimulus and job creation but is increasingly concerned about the enormous fiscal deficit.

If the first Stimulus Package could be rewritten to expedite the flow of funds that would be the optimal approach. Barring that, will Obama forsake part of his agenda to address more economic stimulus?

Barack and a hard place!!

About Larry Doyle 522 Articles

Larry Doyle embarked on his Wall Street career in 1983 as a mortgage-backed securities trader for The First Boston Corporation. He was involved in the growth and development of the secondary mortgage market from its near infancy.

After close to 7 years at First Boston, Larry joined Bear Stearns in early 1990 as a mortgage trader. In 1993, Larry was named a Senior Managing Director at the firm. He left Bear to join Union Bank of Switzerland in late 1996 as Head of Mortgage Trading.

In 1998, after 15 years of trading and precipitated by Swiss Bank’s takeover of UBS, Larry moved from trading to sales as a senior salesperson at Bank of America. His move into sales led him to the role as National Sales Manager for Securitized Products at JP Morgan Chase in 2000. He was integrally involved in developing the department, hiring 40 salespeople, and generating $300 million in sales revenue. He left JP Morgan in 2006.

Throughout his career, Larry eagerly engaged clients and colleagues. He has mentored dozens of junior colleagues, recruited at a number of colleges and universities, and interviewed hundreds. He has also had extensive public speaking experience. Additionally, Larry served as Chair of the Mortgage Trading Committee for the Public Securities Association (PSA) in the mid-90s.

Larry graduated Cum Laude, Phi Beta Kappa in 1983 from the College of the Holy Cross.

Visit: Sense On Cents

Be the first to comment

Leave a Reply

Your email address will not be published.